Leader of mortgage scam pleads guilty

Gang member’s scheme caused huge bank losses

FEDERAL COURT  A San Diego gang member who federal authorities said was the leader of a massive mortgage fraud scam pleaded guilty yesterday to participating in a racketeering conspiracy involving bank fraud, money laundering and other crimes.

Darnell Bell, 39, faces a maximum of 20 years in prison. Prosecutors said he was a chief orchestrator of a fraud and kickback scam that used straw buyers, fraudulent loan applications and bogus escrow documents on more than 100 properties in San Diego County.

The scheme resulted in real estate losses between $20 million and $50 million.

He’s the fourth person, and second principal, to plead guilty under an indictment naming 24 people that was unsealed last year.

Earlier, Michael Ivy pleaded guilty to a conspiracy charge. Ivy was the owner of The Real Estate Center of La Mesa, which authorities said played a central role in the scam. He is awaiting sentencing.

The ring identified properties that had been languishing on the market for months. Then, using “straw buyers,” ring members used 100 percent borrowed money and paid more than the asking price for the homes.

That overage amount was put into an account for a bogus construction company that Bell set up. The money was ostensibly to be used for retrofitting homes for disabled access, but no work was ever done.

The “buyers” later walked away from the homes, sending them into foreclosure and sticking the lenders with losses.

Bell, known as “D-Bell,” is a documented member of the Lincoln Park street gang in San Diego.

The indictment said he used his status in the gang to recruit other members and enforced discipline among the diverse web of conspirators.

They included an appraiser, a notary, an escrow officer, a tax preparer and a real estate broker.

When the ring was broken up, the bank account Bell set up contained $9 million in proceeds.

Ivy was alleged to have pocketed $200,000 during the time of the scheme, which took advantage of the lax lending standards widely at play during the real estate bubble years.

Because the case is still active, the U.S. Attorney’s Office declined to comment on the plea yesterday.

Two other principals still face charges. Stanley Gentry, a real estate broker, allowed the ring to have access to the multiple listing service and received a $10,000 fee per month, according to the indictment.

One other defendant, Billie Bishop, was the escrow officer on more than 100 transactions.

No trial date has been set, but court records show plea deals are on the table for some of the straw buyers.

The lawyer for one of those buyers said in a court filing that prosecutors have a “package deal” proposal for eight of the buyers, including her client, Ray Logan.

The others are not identified, and the indictment lists at least 13 straw buyers.

Damiani said they are weighing the offer, which, as a package deal, must be accepted by all defendants or none of them gets it.

She declined to outline the terms of the deal but said the penalty would be “significantly lower than what my client would face if he went to trial and was convicted of all the charges.”

One straw buyer, Marcus Dozell, pleaded guilty to racketeering conspiracy and was sentenced Feb. 16 to 46 months in prison.

The indictment said Dozell recruited other straw buyers and was paid $100,000.